The Colorado division of the newest and biggest Catholic hospital system plans to buy a multimillion-dollar insurance company from a consortium of owners, which includes the nation's largest for-profit chain, Columbia/HCA Healthcare Corp.
Columbia's decision to let a competitor take over the plan is in marked contrast to its actions in Ohio. There, the chain fought a long, eventually unsuccessful battle to acquire Blue Cross and Blue Shield of Ohio.
In Colorado, the purchaser is Centura Health, a joint venture of a Catholic Health Initiatives division and PorterCare Adventist Health System, both based in Denver. Centura operates 17 hospitals in Colorado and Kansas and reported $1.4 billion in 1996 revenues. CHI operates 60 hospitals. It was formed last year through the merger of three Roman Catholic hospital chains.
The target of Centura's acquisition is Denver-based Sloans Lake Managed Care, which runs a 400,000-enrollee PPO and a 14,000-enrollee HMO. It also sells PPO services to automobile insurers and would provide care to about 1 million Coloradans as part of their auto insurance. Sloans Lake posted 1996 revenues of $23 million, projected to rise to $41 million this year.
Centura already owns 28% of Sloans Lake. Centura President Gary Susnara said the system decided to purchase the remaining shares to prevent a sale to an undisclosed out-of-state venture capitalist.
The intent of the purchase isn't to give Centura its own managed-care plan, although Susnara acknowledged the company could prove a valuable learning experience to both CHI and the Seventh-day Adventist Church, which owns PorterCare.
Instead, he said Centura wanted to make sure the Colorado plan was operated in-state. "This gives us an opportunity to see if we can design a plan in Colorado to meet Colorado needs," Susnara said.
He said there were no plans to limit providers in the Sloans Lake network to Centura only and that Sloans Lake would be operated as an independent for-profit company. He declined to disclose financial terms until the completion of a due-diligence review in late May.
Columbia-HealthOne, Columbia's Colorado network, owns 11% of the company. It said its current priorities are reinvesting in its own facilities.
The majority owners of Sloans Lake are Principal Financial Group and Massachusetts Mutual Life Insurance Co.